Harbour Energy provides the following unaudited Trading and Operations Update for the nine months to 30 September 2022.

Operational highlights

• Production of 207 kboepd, an increase of 27 per cent on the corresponding prior period; full year production now expected to be in the upper half of 200-210 kboepd guidance
• Unit operating costs of $14/boe, a decrease of 18 per cent on the corresponding prior period; forecast 2022 operating costs reduced to c.$14/boe (versus previous guidance of the lower end of $15-16/boe)
• Improved safety record with total recordable injury rate of 0.78 per million hours worked
• Successful drilling at J-Area and Catcher (UK) and Natuna Sea Block A (Indonesia) supporting production; eight rigs currently active including at J-Area and Beryl (UK) and Chim Sao (Vietnam)
• International projects progressed
  • Mexico: Zama Unit development plan well-advanced
  • Indonesia: Initial plan of development for the Tuna field submitted; planning underway for further drilling across the Andaman Sea acreage following the material Timpan gas discovery
• Increased momentum on UK CCS projects including new Viking CCS partnerships with West Burton Energy and Associated British Ports

Financial highlights

• Revenue of $4.1 billion with realised post-hedging oil and UK gas prices of $80/bbl and 86 pence/therm versus the average Brent price of $105/bbl and NBP gas price of 209 pence/therm
• 2022 total capex guidance reduced to c.$1.0 billion from c.$1.2 billion, primarily driven by the late arrival of drilling rigs and the weaker pound sterling to US dollar exchange rate
• 2022 total UK tax liability expected to be c.$900 million, of which c.$400 million relates to the recently enacted UK Energy Profits Levy
• Forecast 2022 free cash flow increased to $2-2.2 billion1 (after c.$700 million of total cash tax payments)
• Net debt of $1.1 billion as at period end; continue to expect to be net debt free in 2023
• Shareholder distributions of $500 million completed year to date, including c.$100 million interim dividend paid on 19 October; new $100 million buyback programme approved

Linda Z Cook, Chief Executive Officer, commented:
“Harbour is delivering operationally with higher production volumes and lower costs, supported by improved efficiency and our capital investment programme. We also remain focused on reducing our own greenhouse gas emissions and advancing our two UK CCS opportunities, Harbour-led Viking CCS in England and Acorn in Scotland. Our company is proud to be the UK’s largest oil and gas producer and, through the combination of these activities, contributing meaningfully to domestic energy security while at the same time working to help realise a shared ambition of UK leadership in CO2 capture and storage.

However, the recently enacted UK Energy Profits Levy (EPL) and speculation about further fiscal changes have created uncertainty for independent oil and gas companies like Harbour. As a result, evaluating expected returns from long term investments has become more difficult and investors are advocating for geographic diversification.

While we fully recognise the significant challenge in the UK to put public finances on a sustainable footing, we urge the government to carefully consider the consequences of any increase in or extension of the EPL. At a time when oil and gas producers are being asked to invest more to help ensure the UK’s energy security and are considering longer term, material investments in CCS, additional taxes would run the risk of undermining our ability to do either.”

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